The sales funnel is one of the most important components of business to business marketing. Without it, you would have no way of knowing how leads interact with your buying process or, what are the successes and weaknesses of each stage. Sales funnel metrics are ways to collect all the data needed to determine this information. Sales funnel metrics can be broken into 2 groups: counts and comparisons. In terms of usefulness, these go hand in hand. Without counts, you have nothing to compare. Here are the metrics that you should be measuring:
“Counting” Metrics
- Volume:
This metric answers the cornerstone questions “how many” and “how much,” such as “How many automation-based leads?” You can ask these questions at any time and for each stage of your funnel. It is important to remember that volume does not always equal growth and profit, which can be hard to see without more information.
- Unit Cost:
This metric looks at volumes for a specific stage and asks how much each item in that stage costs. Serving as a reality-check, this metric will help you evaluate which items are worth the cost and which are not, taking into account conversion rates and revenue per unit. It is worth considering that lower unit cost often correlates to lower conversion rates.
- Timeframe:
This metric asks how long it takes prospects to move through each stage in the sales funnel. Without a timeframe, you wouldn’t be able to accurately project revenue or profit contribution. If your timeframes grow longer, it is time to take a closer look at your processes.
- Unit lifetime Value:
The lifetime value reflects the gross or expected profit over the expected life of the customer. Not all leads or customers have equal value, and this metric helps to determine which leads should get more of your time and attention.
“Comparison” Metrics
If your lead volume went from 700 to 7,000 per year, it would seem like you were doing an amazing job. But without context, these numbers are almost meaningless. Does your number take into account the leads that didn’t close? How does the amount of leads you generate compare to similar companies? Context is everything.
- Conversion of Each Stage:
Earlier it was mentioned the importance of asking “how many” and “how much” but what is even more important is understanding the movement from one stage of the sales funnel to another. Studying at what point conversions are made can help you determine if there are weak points in your sales funnel and if downstream conversions are increasing or decreasing.
- Revenue/Cost Ratio:
Comparing the cost to the revenue at each stage puts both into context and brings to light what your return on investment is. The better the ratio, the better job you’re doing. There are certain times when other factors matter more, but having the best ratio possible should always be one of your main focuses.
- Lifetime Value/Cost ratio:
This metric compares the life of the lead to their expected revenue or profit, also taking into consideration acquisition costs. It also helps to minimize our human tendency to be short-sighted.
- Baselines:
Baselines help you answer the question “to what degree are you making things better?” They are statistically meaningful volumes at each stage that let you compare what you are doing now to what you have done in the past.
- Benchmarks:
Similar to Baselines, benchmarks also allow you to draw comparisons but instead of looking at your past, you instead focus on the performance of other companies. Benchmarks can have a positive influence on your performance, inspiring you to do better. However, there should be a limit to how many companies you look at, only focusing on the best companies.
If you have any questions about any of the metrics mentioned, or how to develop a sales funnel click on the banner below to schedule your free 30-minute consultation with us.
